What Office Program Would Be Best to Use to Create a Budget?

by Sam Ashe-Edmunds

Excel is the most appropriate Office program for managing your finances.

Unless you’ve lived or worked in a cave for the past 20 years, you’ve probably used the Microsoft Office suite of computer programs. Word, Excel, PowerPoint and Outlook are the most common applications, allowing you to perform a wide variety of tasks without a significant learning curve. While Word might be the simplest application for listing your personal income and expenses, using Excel is the easiest way to create and use a budget, based on the formulas you can create to have the budget do the work for you, instead of vice versa.

Benefits of Word

Microsoft Word is easy to use because it requires only typing skills. If a person’s budgeting goal was to simply list your income and expenses and fill in amounts next to each, Word might be the Office program of choice. However, if you need to update your budget as you pay expenses, Word will require you to do most of the work manually.

Benefits of Excel

Like Word, Excel allows you to list your income and expenses. Unlike Word, Excel lets you create a variety of reports that automatically update as you enter your income and expenses each time. The program does this by allowing you to enter simple formulas into different fields to add, subtract, multiply and divide income and expense rows or columns. With Excel, you’ll reduce the chance of math errors as you track your average monthly spending, project year-end results and set savings goals based on your net income or excess cash available after you pay your bills.

Useful Reports

Common reports for personal budgets made using Excel include “Total,” “Actual,” “Average Monthly,” and “Projected.” To create these reports, you’ll enter formulas into specific fields. For example, if line 3 of your budget is groceries, you can keep track of your average monthly spending on groceries as the year progresses, see your total spending year-to-date and project what your year-end-total will be based on your current spending. To determine your average spending, you divide your total spending by the months that have passed. To project your year-end spending, you multiply your average monthly spending by 12.

Formulas

To create a report in Excel, you use standard formulas starting with the five characters, =sum( followed by the information contained in other fields. For example, your budget might list groceries across the page in row 3. Your 12 monthly columns might run from row C to row N. To determine your total spending, you would put =sum(C3:N3) in column O, row 3. This formula will add your grocery spending from January to December, showing your total in O3. To see your average monthly spending, you would divide your O3 total by the number of months that have passed, putting this information in column P, row 3. In April, your P3 field would read =sum(O3/4). This will divide your total grocery amount by the four months that have passed, giving you your average.

Ease of Use

Excel formulas are easy to learn, you’ll only need a few of them and you’ll get the hang of using them quickly. If you can spend 10 minutes on the phone with a friend who uses Excel, you can skip the Office tutorial. Once you create your initial budget document, you no longer have to perform any math -- your Excel budget does it for you.

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About the Author

Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is an internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such Smart-Healthy-Living.net, SmartyCents and Youthletic. Edmunds has a bachelor's degree in journalism.